What are drawings on a balance sheet?

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Solution

As drawings influence the company’s financial statements, it represents the drawings made by its owners for personal use. Drawings decrease the equity to the same amount that is drawn by the owner.

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What is a balance sheet? What are its characteristics?

Q. Mannu and shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balance sheet of the firm as on 31st March 2018:

BALANCE SHEET as at 31^st March, 2018
Liabilities		₹	Assets		₹
Mannu’s Capital	30,000		Drawings:
Shristhi’s Capital	10,000	40,000	Mannu	4,000
			Shristhi	2,000	6,000
			Other Assets		34,000
		40,000			40,000

Profit for the year ended 31st March, 2018 was ₹ 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

Q. Select the most appropriate alternative from those given below and rewrite the statement.

The drawings of partners are transferred to __________________ account.
a) trading
b) profit and loss
c) partner’s capital
d) balance sheet

Following is the extract of the Balance Sheet of, Neelkant and Mahdev as on March 31, 2017:

Balance Sheet as at March 31, 2017
	Amount		Amount
Liabilities	Rs	Assets	Rs
Neelkant’s Capital	10,00,000	Sundry Assets	30,00,000
Mahadev’s Capital	10,00,000
Neelkant’s Current Account	1,00,000
Mahadev’s Current Account	1,00,000
Profit and Loss Apprpriation
(March 2017)	8,00,000
	30,00,000		30,00,000

During the year Mahadev’s drawings were Rs 30,000. Profits during 2017 is Rs 10,00,000. Calculate interest on capital @ 5% p.a for the year ending March 31, 2017.

Q. Following is the Balance Sheet of Radha Ltd. as at 31st March, 2019:


Particulars	Note No.	31st March, 2019, (₹)	31st March, 2018, (₹)
I. EQUITY AND LIABILITIES 1. Shareholders' Funds
(a) Share Capital		15,00,000	10,00,000
(b) Reserves and Surplus		10,00,000	10,00,000
2. Non-Current Liabilities
Long-term Borrowings		8,00,000	2,00,000
3. Current Liabilities
(a) Trade Payables		5,00,000	3,00,000
Total		38,00,000	25,00,000
II. ASSETS
1. Non-Current Assets
Fixed Assets:
(i) Tangible Assets		25,00,000	15,00,000
(ii) Intangible Assets		5,00,000	5,00,000
2. Current Assets
(a) Trade Receivables		6,00,000	3,50,000
(b) Cash and Cash Equivalents		2,00,000	1,50,000
Total		38,00,000	25,00,000

You are required to prepare Comparative Balance Sheet on the basis of the information given in the above Balance Sheet.

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